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Dollar General Earnings up 51%

GOODLETTESVILLE, TENN. - The home textiles department is among the areas where Dollar General is experiencing an uptick in sales, executives said while commenting on the retailer's record second quarter performance last week.
     Fatter gross margins - up 101 basis points in 2Q to 232% of sales - helped boost net income for the quarter ended July 30 by 51% to $141.2 million, or 41 cents per share.
     Executives also credited the retailer's EDLP strategy for the gain.
     "We avoided sweeping reactionary moves and instead only made changes that were strategic and sensible. That approach paid off for us with productive sales without margin sacrifi ce," said Rick Dreiling, chairman and ceo.
     Sales rose 10.8% to $3.21 billion during the quarter, with comps up 5.1% on top of an 8.6% bump in comps in the year-ago period.
     As many other retailers have noted in reporting quarterly results, Dreiling cautioned the combination of unemployment and under-employment is keeping consumers on edge and retailers pummeling prices.
     "Consumers continue to experience significant challenges, and the value messages from all retailers were highly promotional. This has been one of the toughest competitive environments I can remember," he said.
     Nonetheless, Dollar General raised its earnings outlook for the full year last week to $1.68 to $1.74 per share. Previously, the company had expected EPS of $1.62 to $1.69. The retailer anticipates sales will rise 8.5% to 10.5% for the year.
     Dollar General plans to step up its store opening program in the second half, with about 600 new units and 500 remodels/ relocations.
      The remodel - which includes raising shelf profiles by 7 inches to expand merchandise offerings - started rolling out to the domestics department, among others, during the second quarter.

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